Question

During 20X1, Craig Company had the following transactions: A. Purchased $200,500 of 10-year bonds issued by...

During 20X1, Craig Company had the following transactions:

A. Purchased $200,500 of 10-year bonds issued by Makenzie Inc.
B. Acquired land valued at $69,200 in exchange for machinery.
C. Sold equipment with original cost of $539,700 for $330,100; accumulated depreciation taken on the equipment to the point of sale was $179,700.
D. Purchased new machinery for $120,300.
E. Purchased common stock in Lemmons Company for $55,800.
Required:
1. Prepare the net cash from investing activities section of the statement of cash flows.
2. CONCEPTUAL CONNECTION Usually, the net cash from investing activities is negative. How can Craig cover this negative cash flow? What other information would you like to have to make this decision?
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Answer #1

Ans:

1.

Craig Company
Statements of cash flow
For the year ended Dec 31,20X1
Investing activity
Investment in Bond $ -200,500
Cash from Sold of Equipment $ 330,100
Paid for Purchase of equipment $ -120,300
Paid for Purchase of Investment in Share of Lemmon's company    $ -55,800
Net cash flow used by investing activity $ -46,500
Non cash Transaction
Acquired land in exchange of machinery

2.

Negative cash flow from Investing activity covers through operating activities and Financial activities.

Hope this helped ! Let me know in case of any queries.

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